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1 Michael Schuyler, Comparing the Growth and Revenue Effects of Four Proposed Depreciation Systems: Baucus, Camp, Wyden, and Full Expensing 1 (2014)

handle is hein.taxfoundation/taxfaaf0001 and id is 1 raw text is: Tx Comparing the Growth and Revenue FOUNDATION Effects of Four Proposed Depreciation Systems: Baucus, Camp, Wyden, and Full Expensing Jun. 2014 No. 43 By Michael Schuyler Fe ow Key Findings * This paper provides a side-by-side comparison of the long-run growth and revenue effects of the cost recovery systems in the Baucus proposal, the Camp plan, the Wyden-Coats proposal, and full expensing. * The cost recovery proposals of Baucus, Camp, and Wyden would lengthen asset lives and score as increases in federal revenue on a static basis. However, when accounting for economic growth, each proposal would actually lose revenue in the long run due to lower growth. * Lengthening the lives of capital assets worsens the anti-investment bias in the tax code and leads to lower investment, lower productivity, lower wages, and slower economic growth. * The Baucus cost recovery system would decrease GDP by 2.53 percent, the capital stock by 7.08 percent, wages by 2.16 percent, jobs by 449,500, and federal revenues $63.3 billion after accounting for growth effects (compared to an estimated increase of $31.3 billion on a static basis). * The Camp cost recovery system would decrease GDP by 1.18 percent, the capital stock by 3.35 percent, wages by 1.01 percent, jobs by 206,000, and federal revenue by $26.4 billion (compared to an estimated increase of $17.4 billion on a static basis). * The Wyden cost recovery system would decrease GDP by 1.91 percent, the capital stock by 5.39 percent, wages by 1.64 percent, jobs by 338,100, and federal revenue by $43.3 billion (compared to an estimated increase of $28.2 billion on a static basis). * Full expensing would increase GDP by 5.13 percent, lift the capital stock by 15.4 percent, raise wages by 4.36 percent, create 885,300 jobs, and boost federal revenue by $121.3 billion (compared to an estimated decrease of $60.5 billion on a static basis).

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